ISS recently launched its annual policy survey for purposes of updating and refining its policies for 2017. The Press Release announcing the 2017 Policy Survey can be found at: https://www.issgovernance.com/iss-launches-2017-global-benchmark-policy-survey/. The survey will close on August 30th at 5 pm Eastern.
The ISS 2017 Policy Survey can be accessed at: https://www.surveymonkey.com/r/LZJHK7G
The more interesting questions that could potentially impact ISS’ US policies are:
Q. 2. Overboarding: ISS is asking whether executive chairs should be evaluated for overboarding purposes using either the standard applied to sitting CEOs (no more than 3 total boards) or the standard applied to non-executive directors (no more than 5 total boards).
Q.4. Board Refreshment: ISS is asking whether there are any tenure factors that would cause concern with a board’s nominating and refreshment process. Possible concerns listed include: absence of newly-appointed independent directors in recent years; lengthy average tenure; high proportion of directors with long tenure. ISS also has “tenure is not a concern” and “other” listed as possible responses.
Q.7. Say-on-Pay Frequency: ISS is asking what Say on Pay frequency is favored and if the frequency depends on the company, what factors are considered, including: size of the company, financial performance, presence or absence of recent problematic executive pay practices; or, level of shareholder support for Say on Pay votes at past meetings.
Q.8. Executive Pay Assessments (Cross-border): ISS is asking which of several statements captures how the respondents think about cross-border compensation where a company is incorporated in one country but listed in another [ISS currently evaluates each compensation proposal under the policy fo the country whose laws or listing rules require the vote, but generally aligns the vote recommendations based on the policy perspective of the country in which the company is listed]. The possible views are: (1) vote recommendations for compensation proposals should be aligned so as to not produce inconsistent evaluations of a single pay structure; (2) where pay evaluations under one country’s policy would result in negative recommendation but, under the other country’s policy would result in a favorable recommendation, it is acceptable to have opposing recommendations if each reflects the underlying policy of the relevant country; or (3) other.
Q.10. Metrics Used in P4P Assessments: ISS is asking how much respondents would support the use of metrics other than TSR in quantitative P4P assessments: strongly support; support; neutral; oppose; strongly oppose. If a respondent indicates neutral to strongly support, ISS asks which financial metrics should be used: revenue metrics; earnings metrics; return metrics; return on investment metrics; cash flow metrics; economic profit metrics; or, other.
Based on these questions, I think we can expect some updates to ISS’s P4P analysis as part of its Say on Pay vote recommendations. However, I will be surprised if ISS significantly updates its policy with respect to Say on Pay Frequency since it appears that many investors prefer to see an annual vote which is currently the frequency ISS supports.